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Tether, the firm that issues the world’s largest stablecoin USDT, announced it intends to allocate 15% of its realized net profits from investments into Bitcoin on a monthly basis. The decision is a part of Tether’s new approach to diversifying its treasury.

Tether Holds $1.5 Billion in BTC

Blockchain giant Tether said on Wednesday it would invest 15% of its realized net profits into Bitcoin as the company embarks on a new investment strategy to diversify its USDT-backed reserves. In other words, the Tether is looking to invest hundreds of millions of dollars to back USDT, which is launched on multiple blockchains.

Based on Tether’s most recent attestation report, the crypto firm’s planned investment in BTC would amount to around $222 million. The report, issued last week, showed that Tether already held $1.5 billion worth of Bitcoin in its reserves. In addition, the company said it will custody its BTC holdings on its own rather than hire third-party custodians. Last year, Tether hired a new audit firm to watch over its reserves reports.

“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset. Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential.”

– said Paolo Ardoino, CTO of Tether.

Is Tether Moving Away From Government Securities?

Tether said its new investment approach would focus exclusively on utilizing gains from its investments while disregarding unrealized profits secured from price increases.

The company previously held a great portion of its reserves in commercial paper – a type of short-term, unsecured debt issued by companies. But because commercial paper is considered riskier than other forms of debt, the crypto company decided to reduce its commercial paper reserves and replace them with only US government debt securities. In February 2023, Tether’s commercial paper holdings were slashed to 0.

Now, the USDT issuer is turning to Bitcoin to strengthen further and diversify its reserves. This could mean that Tether is ready to rotate away from government securities slowly.

Earlier this month, Circle, a company that issues the USDC stablecoin, said it plans to back its USDC reserves with short-term Treasurys, citing potential risks of the US defaulting on debt. Circle said it does not hold Treasurys that mature beyond June.

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